How to Answer the Why Private Equity Interview Question
Why Private Equity is a common private equity interview question you’ll encounter if you’re going through the interview process at a PE firm. It’s important to plan ahead so you’re not caught flat-footed and so that you have a compelling answer to the question. This guide will help you think about how to structure your answer.
Why LBO? From CFI’s LBO Modeling Course.
Example Why Private Equity Answer
Note: the answer below is from the perspective of an investment banking analyst or associate.
After working on several consumer internet deals, I’ve realized that I’m extremely passionate about the sector, and I’d like to be closer to operating companies in the space. While I’ve enjoyed working on these deals in IB, I’d like to have a longer-term focus and believe the case for investing in consumer internet is still very strong. I believe the companies you’ve invested in here at PE Company Partners are great names and I’d like to be a part of building and growing this type of portfolio. While I thoroughly enjoy financial modeling work, I’d also like to get some exposure to the Boards of Directors and CEO or CFO of operating companies to help create value.
What to Include in Your Answer to “Why Private Equity?”
Based on the answer above you can probably identify a few key points that are strategically mentioned. Below is a list of the key points you should probably include.
What to discuss:
- Highlight that you have some transaction experience
- Express an interest in a sector that the PE firm invests in
- Position yourself as a long-term thinker or investor
- Show that you know what the PE firm has invested in
- Express a desire to work with portfolio companies to create value
While all of the above are great things to talk about, there are also some issues that it’s best to stay away from. It’s probably best if you don’t mention the following issues:
Different Paths to Private Equity
While the examples in this article have focused on investment banking (the most common path to private equity), there are other paths that should be mentioned as well.
Paths to PE include:
Since investment bankers work closely with PE firms on their transactions, IB is by far the most common path into the industry.
Top tier consulting firms (McKinsey, Bain, BCG, etc.) may also present opportunities, as well as people who worked on deals at public companies in the corporate development ground.
Finally, MBA recruitment can open the door to people from a wider range of backgrounds, though it’s rare to break into PE outside of coming from a previous job in IB, consulting, or Corp Dev.
For more practice to the Why Private Equity interview question, compare this guide to our Why Investment Banking? Guide.
Thank you for reading CFI’s guide to answering one of the toughest private equity interview questions – Why private equity? To learn more and to ensure you’re well prepared, check out these additional resources: